Do not make difficult times more difficult for ourselves.

When I was blogging more actively, advocating prudence and reminding readers to be careful of overleveraging financially was something I did on a pretty regular basis.

I also said that we should always have an adequate emergency fund and do not think that we can always depend on lenders to extend a helping hand.

We should develop a crisis mentality and do not think that we are invincible.

Remember that bad things do happen and when they happen, it is often without warning.

See this blog and the related posts:
Husband lost his job and my savings is zero!

The COVID-19 crisis is not just a bad thing happening as it is probably the worst thing to happen in many decades.

We are probably familiar with the saying "spare the cane and spoil the child."

Sounds heartless but it works.

I am one such beneficiary or victim. ;)

I believe that people do learn better after a painful lesson or a few and the COVID-19 crisis has probably left some cane marks on most of us.

Unless we are very rich, we cannot afford to feel invincible.

Just because some people we know are buying a second home or an investment property, it does not mean we should too, especially if it means having to borrow large sums of money and having a harder time to make ends meet.

Why risk so much for something we don't really need but maybe want?

So, when do we know we are overleveraged?

Do some stress testing and imagine losing our jobs or our business doing badly resulting in income going to zero.

How long would we be able to last financially in such a situation?

Ah, I have passive income!

Some wonder why I have such a big emergency fund even though my passive income seems more than adequate. 

The COVID-19 crisis is probably eloquent enough to provide the answer.

Dividends can be suspended or reduced and that's what happened during this crisis.

See this blog: An unbeatable level of certainty...

So, what triggered this blog?

An article on investing in properties in Iskandar, Johor and how difficult things are for some.

This is a topic I blogged about before as well.

"The Johor skyline is now dotted with empty condominium units, due to an oversupply in the market and lack of foreign buyers.

"When Singapore business owner Jonathan Gan purchased a four-room condominium at Lovell Country Garden in 2018, he thought he had clinched his dream retirement home.

"The freehold apartment located near Johor Bahru’s city centre was twice the size of his three-room HDB flat in Singapore, but the cost was only half of the latter when he bought it directly from the developers.

"Just three years after he purchased it, Gan, who bought the unit at around RM1 million (US$242,000), is having a hard time trying to sell it, even though the asking price is a fraction of what he paid for it.

"Property analyst Debbie Choy, who is director of Knight Frank Malaysia’s Johor branch, said the situation is particularly bad for condominiums and serviced apartments, of which there is an oversupply in the Iskandar region.

"Even owners of the more premium, newer developments in Johor Bahru are having problems trying to attract tenants.

"In its report, Henry Butcher Malaysia highlighted that Johor was the state with the highest proportion of unsold residential properties in the country, even before COVID-19."

Source:
CNA, 12 June 2021. 

Remember not to ask barbers if we need a haircut.

When the tide goes out, we will find out who have been swimming naked.

In a more recent blog, I said that some people have nothing to risk but everything to gain when asking us to part with our money.

Even people we think of as friends who are not property agents might be getting a commission when they recommend that we buy a property.

Remember to be careful with our money as nobody cares more about our money than we do.

For sure, external factors are making things financially more difficult for many of us. 

If we have made the situation worse because of bad decisions we have made in the past, learn the lesson and avoid making similar decisions again in the future.

Do not make financially difficult times more difficult for ourselves. 

References:

1. Buying property in Iskandar, Johor.

2. Two questions to ask when buying a property.

3. Use CPF savings for homes and investments.

2Q 2021 passive income: COVID 19 endemic and rights issues.

One of Gurmit Singh's songs on the COVID 19 situation has a line that goes, "Things different already."

That was when the COVID 19 pandemic was relatively new and we had to implement a circuit breaker in Singapore which was more or less a lockdown for two months.

Lives and livelihoods were all badly affected and after more than a year, are things still different?

Well, this is the new normal and if we think that this normal is going to be the one that lasts, then, things are going to be the same but not the same as before the pandemic.

So, COVID 19 has become endemic just like the seasonal flu which we have been living with forever.

COVID 19 is just more infectious and, in some cases, deadlier.

I know some people who get themselves vaccinated yearly against the seasonal flu but I am not one of them.

However, I might be getting vaccinated against the COVID 19 on a yearly basis.

All of us probably would have to do this to help ensure that we do not give the virus room to mutate and become harder to deal with.

This is a major worry as so many countries in the world are not vaccinating their population fast enough.

Anyway, as Singapore recovers from the pandemic and learns to live with the higher probability of COVID 19 becoming endemic, I expect my investments to continue to bring home the bacon although smaller in size for now.

So, what did I do in 2Q 2021?

I thought it would be absolutely nothing until SMM or SembCorp Marine announced that they would be having a 3 for 2 rights issue at 8c per rights share to raise $1.5 billion to strengthen their balance sheet.

Didn't they just have a rights issue a year ago for the same reason?

Regular readers know that I rather like rights issues when the money is used to generate even more income.

However, I don't like rights issues when the money is used to strengthen balance sheets as it does nothing for income investors like me.

So, shareholders of SembCorp Marine who supported the 5 for 1 rights issue at an issue price of 20c per rights share a year ago just got bamboozled in the backside again.

Last year, when the demerger of SembCorp Industries and SembCorp Marine was announced, I bought more shares of the former and was consequently given many free shares in the latter.

I don't mind holding on to the free shares as I wait for SembCorp Marine to transform and maybe do better in time to come.

Of course, there is also the possibility of a merger with KepCorp's O&M business which seems set to happen and if that should happen, SembCorp Marine will need more money.

However, I am less inclined to pump in my own money at this point into SembCorp Marine as it is anyone's guess how many years it is going to take for them to generate an income for me.

In my retirement, I cannot afford to be too adventurous with my money and I decided to let go of my free shares in SembCorp Marine.

I also have another rights issue on my plate and that is a 214 for 1000 rights issue at an issue price of 59.5c per unit by IREIT Global.

For sure, I like this rights issue a lot more than SembCorp Marine's.

The money will go towards the purchase of 27 freehold assets in France to be leased to a global sporting goods company.

By supporting this rights issue, I will be expecting more passive income in future and as an income investor, this makes me happy.

Anyway, how did 2Q 2021 fare for me on the passive income front?

Some of my businesses like ComfortDelgro are still having a hard time and paying less or no dividends while some like the local banks are capable of paying more dividends but have yet to do so for various reasons.

Although faced with challenges, my portfolio generated a decent amount of passive income in 2Q 2021:

S$ 44,874.21

This is much lower than the $57,395.95 received last year in 2Q 2020.

However, last year saw contributions by Centurion Corporation and also Accordia Golf Trust and they were both large positions.

Those contributions are missing this time.

Centurion Corporation is paying down debt instead of distributing income to shareholders which is probably a good thing in the longer run as the business is still generating good cashflow.

I expect Centurion Corporation to emerge from the pandemic stronger than before and I hope they remember to reward their loyal shareholders like me then.

Last year also saw much bigger contribution made by ComfortDelgro, of course.

Increasing exposure to the local banks last year has helped to mitigate the expected reduction to my passive income in 2Q 2021.

Together the local banks accounted for about a quarter of the passive income received and I expect this to rise once they increase their dividend payouts as the Singapore government expects COVID 19 to become endemic and things go back to normal.

This is important for me because 2Q 2021 passive income was helped by Wilmar's higher dividend to reward shareholders after the listing of its business in China and also a higher distribution by AIMS APAC REIT (AA REIT) as they released some distributable income they held back before.

These bigger distributions provided a boost to my 2Q 2021 passive income but I probably should not expect them to be repeated.

Other investments which are significant contributors to my passive income in 2Q 2021were VICOM, Ho Bee Land, ST Engineering and Frasers Logistics and Commercial Trust.

Hmm, I guess that's all for now. 

Everybody, till the next blog, please stay safe to keep everybody safe.

No one is safe till all of us are safe.

References:

1. SembCorp Industries investment is larger now.

2. IREIT Global: 214 for 1000 rights issue.

3. 2Q 2020 passive income: COVID 19 crisis.